Problem $20-4$A $($Algo$)$ ManufecturIng: Preparation of a complete master budget LO P$1,$ P$2,$ P$3$

The management of Zigby Manufacturing prepared the following balance sheet for March $31.$

To prepare a master budget for April, May, and June, management gathers the following Information.

a$.$ Sales for March total $23,000$ units. Budgeted sales In units follow: April, $23,000$; May, $15,300$; June, $20,400$; and July. $23,000.$ The product's selling price is $$24\mathrm{.}00$ per unit and its total product cost is $$20\mathrm{.}00$ per unit.

b$.$ Raw materlals Inventory consists solely of direct materlals that cost $$20$ per pound. Company policy calls for a given month's ending materlals Inventory to equal $50\%$ of the next month's direct materlals requirements. The March $31$ raw materlals inventory is $4,210$ pounds. The budgeted June $30$ ending raw materials Inventory is $4,100$ pounds. Each finished unit requires $0\mathrm{.}50$ pound of direct materlals.

c$.$ Company policy calls for a glven month's ending finished goods inventory to equal $80\%$ of the next month's budgeted unit sales. The March $31$ finlshed goods Inventory is $18,400$ units.

d$.$ Each finlshed unit requires $0\mathrm{.}50$ hour of direct labor at a rate of $$15$ per hour:

e$.$ The predetermined varlable overhead rate is $$280$ per direct labor hour. Depreclation of $$21\mathrm{.}523$ per month is the only fixed factory overhead Item.

f$.$ Sales commlssions of $10\%$ of sales are paid in the month of the sales. The sales manager's monthly salary is $$3,100.$

$9.$ Monthly general and administrative expenses Include $$13,000$ for administrative salarles and $0\mathrm{.}5\%$ monthly interest on the longterm note payable.

h$.$ The company budgets $30\%$ of sales to be for cash and the remaining $70\%$ on credit. Credit sales are collected in full in the month following the sale $($no credit sales are collected in the month of sale$).$

L$.$ All raw materlals purchases are on credit, and accounts payable are solely tled to raw materlals purchases. Raw materlals purchases are fully pald in the next month $($none are paid in the month of purchase$).$

J$.$ The minimum ending cash balance for all months Is $$50,000.$ If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an Interest payment of $1\%$ at each month$-$end $($before any repayment$).$ If the monthend preliminary cash balance exceeds the minimum, the excess will be used to repay any loans.

k$.$ Dividends of $$11,000$ are budgeted to be declared and pald In May.

I. No cash payments for Income taxes are budgeted in the second calendar quarter. Income tax will be assessed at $35\%$ in the quarter and budgeted to be pald in the third calendar quarter.

m$.$ Equlpment purchases of $$100,000$ are bu

Required:

Prepare the following budgets for the months of April, May, and June:

Sales budget.

Production budget.

Direct materlals budget.

Direct labor budget.

Factory overhead budget.

Selling expense budget.

General and administrative expense budget.

Schedule of cash recelpts.

Schedule of cash payments for direct materials.

Cash budget.

Budgeted Income statement for entire second quarter $($not monthly$).$

Budgeted balance sheet at June $30.$dgeted for the last day of June.

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